The U.S. dollar retreated against its major counterparts in the New York session on Friday, as core personal consumption expenditure price index, the Federal Reserve's preferred measure of inflation, came in lower than expected in February.

Data from the Commerce Department showed that core consumer prices, which exclude food and energy prices, jumped 4.6 percent year-over-year in February.

Annual price growth remains elevated, but this represents a slowdown from the 4.7 percent year-over-year spike in January. Economists had expected the pace of growth to be unchanged.

The Commerce Department said personal income rose by 0.3 percent in February after climbing by 0.6 percent in January. Economists had expected personal income to increase by 0.4 percent.

Meanwhile, the report said personal spending edged up by 0.2 percent in February after surging by an upwardly revised 2.0 percent in January.

Economists had expected personal spending to rise by 0.3 percent compared to the 1.8 percent jump originally reported for the previous month.

The data supported hopes that the central bank will hold off on raising interest rates at its next meeting in early May.

CME Group's FedWatch Tool is currently indicating a 49.2 percent chance the Fed will leave rates unchanged and a 50.8 percent chance of a 25 basis point rate hike.

The greenback retreated to 0.6718 against the aussie, 0.6274 against the kiwi and 1.3520 against the loonie. This may be compared to its previous 8-day low of 0.6737 and 1-1/2-month lows of 0.6297 and 1.3507, respectively. The currency is poised to challenge support around 0.68 against the aussie, 0.64 against the kiwi and 1.33 against the loonie.

The greenback touched 0.9115 against the franc, its lowest level since March 14. On the downside, 0.90 is possibly seen as its next support level.

The greenback eased to 132.74 against the yen, from an early 2-week high of 133.59. Against the euro, it pulled back to 1.0901. The currency may find support around 130.00 against the yen and 1.10 against the euro.

The greenback fell back to 1.2397 against the pound, heading to pierce its previous more than 2-month low of 1.2423. The next likely support for the greenback is seen around the 1.27 level.

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